The S&P 500 booked its smallest one-week point change in nearly a year last week, and an options market reading on future market volatility suggests mild moves will remain the norm over the next month.

Thirty-day implied volatility on the S&P 500, a measure of expectations for future price swings, fell slightly, declining 0.19 point, or 1.98%, to 10.11 Tuesday. That was its lowest level in at least five years, suggesting the options market isn’t pricing in any concern for stocks over the next month. Meanwhile the Chicago Board Options Exchange’s Volatility Index, the market’s so-called fear gauge, finished at a near six-year low.

“The implied volatility lows reflect a general malaise by market participants that portrays a belief that the [S&P 500] is less risky now than it has been in at least five years,” said Ophir Gottlieb, managing director at options-data firm LiveVol. “There is a nontrivial risk that [implied volatility] doubles at some point in the next twelve months.”

The S&P 500 closed up 11.15 points, or 0.7%, to 1530.94 Tuesday, putting the benchmark index within 2.5% of its October 2007 record. Last week, the index added just 1.87 points, for the smallest move in either direction since the index gained just 1.24 points during the week ended March 9, 2012.

An implied volatility reading of 10.11 was the lowest level since at least 2008, according to LiveVol’s Gottlieb. A 30-day backward measure of volatility held at 7.12 Tuesday, the lowest level since Jan. 18, 2011.

The VIX dropped 0.15 point, or 1.2%, to 12.31, the lowest finish since April 20, 2007.

A low reading of implied volatility, a key component of pricing on the index’s options, means investors aren’t bidding up the price of options. All else being equal, that means the price to speculate or hedge using S&P 500 options is at its cheapest in five years, according to Gottlieb.

The price of a neutral strategy known as a “straddle” stood at $3,000 per contract Tuesday. But, should implied volatility rise about 50%, to about 15, the cost of that strategy would rise to about $4,500 a contract, according to Gottlieb.

Implied volatility last finished above 15 on Dec. 31, according to LiveVol data.

A straddle involves the purchase of both “put” and “call” options. It gets its name because of how it involves a leg on two sides of a price — one in calls and one in puts. Being a neutral strategy, it can profit by moves in either direction. When setting up a straddle, investors look to the put and call options that have “strike” prices nearest the current trading price.

Put options grant the right to sell at a set price by a set date, where calls convey the right to buy.

(An earlier version of this post was not updated with the S&P 500′s Tuesday closing level.)

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